Expenses and Liabilities Verification

Under responsible lending obligations, you’re required to collect & verify your client’s financial situation. Although responsible lending and Best Interests Duty are separate obligations, the information gathered for the purposes of responsible lending may help you to determine what’s in your client’s best interests. 

In order to make a recommendation to your client, you must have sufficient information to understand their expenses and the nature of these. In addition to the below mandatory document requirements, you should also use your judgement to determine if further documentation is required. Any documents used to validate expenses must be stored within MyCRM.

The most effective way to collect this information from your clients is through the Online Fact Find and the Goal Setter.

Discretionary and Non-Discretionary Spending

It’s important to understand your client’s discretionary and non-discretionary expenses. This should be done through three key steps:

  1. Collecting your client’s information
  2. Reviewing documents such as their transactional and credit card statements, and 
  3. Through the interview process

Where specific expenses are considered discretionary, ensure commentary is captured on the conversation that was held around these. This is the opportunity to ensure your client(s) are aware of the impact their expenses have on their ability to repay their loan and for you to use your judgement as to whether these appear to be accurate and realistic.

Further, it’s imperative that all information provided is accurate and complete. As per RG273.42, a mortgage broker who provides incomplete or inaccurate information will fail their Best Interests Duty obligation, even if the inaccurate information would increase the likelihood of approval or give the consumer access to better terms.

Document Requirements

Living Expenses:

  • Three months’ statements of all bank and credit card accounts (with account name) within 60 days of submission to the lender 
  • If clients living “rent free”, a confirmation letter from the property owner

Note: All expenses must be entered within MyCRM/Online Fact Find

Existing liabilities NOT being refinanced:

  • Most recent statement with account name confirming balance and limits no older than 60 days when submitted to the lender 

Miscellaneous Liabilities:

  • Copy of ATO debts from ATO portal

Note: proof of balance is NOT required for HECS-HELP and FEE-HELP however you'll still need to comply with the lender's requirements. 

Buy Now Pay Later (BNPL):

  • Copy of ‘buy now, pay later’ current account balance e.g. Afterpay, Zip Pay, store cards

Child support maintenance payment:

Provide one of the following:

  • Three months’ bank account statements showing evidence of payment no older than 60 days when submitted to the lender
  • Child support agency notice
  • Court order confirming payment obligation terms

Note: Ensure Customer Reference Number (CRN) has been redacted

If you have any questions, please contact compliance@loanmarket.com.au